Ask me a dumb question, you’ll get a sarcastic answer
Most consumers use the internet to search for information on mortgages. Here was a recent question on making mortgage payment by an investor:
“I bought an investment property last year. How many months can I skip paying my mortgage before I lose the property?”
The politically correct answer:
“After four missed payments, the foreclosure process will begin.”
The not-so-politically correct answer:
“Stop watching Carleton Sheets infomercials.”
Links: Going broke on medical bills
Here are some interesting articles from across the web:
- After seeing numerous potential clients who’ve filed bankruptcy to stave off the medical bill collectors, this statement/article is extremely true: “Scholars say medical debt is the No. 1 cause of bankruptcy.”
- Higher rates, less house explores how rate increases reduces the property amounts people qualify.
- Dan Green of the Mortgage Reports has a keen mind when it comes to the market. Here are his thoughts on why rates are rising:
- Mortgage-backed securities lost 84 basis points over 5 days
- Fed Futures currently price a greater chance that the Fed will raise the FFR in May than it will lower it
- Since January 5, the Fannie Mae 30-Year 5.5% bond closed worse on 81% of trading days and has worsened in pricing by 146 basis points
- Since December 5, the same bond has been down on 23 of 36 days, or 63.89% of the time
- Federal Reserve Chairman Ben Bernacke did well in his first year. Meanwhile his predecessor, Alan Greenspan, is writing a book called “The Age of Turbulence”.
Something is rotten in the state of Denmark
During my senior year in college, I took a high level English class devoted entirely to Shakespeare’s plays. We studied several including Hamlet. While everyone always remembers the classic line “To be or not to be,” I always liked “Something is rotten in the state of Denmark.”
I didn’t think the line was useful until now…
Recently I came across an article entitled A look at how home mortgages operate around the globe. According to the article the Danish has a similar system as ours. If their mortgage system is anything like ours then something is rotten in the state of Denmark.
Their (the Danish) mortgage system, like ours, relies heavily on the capital markets. Consequently, it is the only country to have home loans with most of the key features of those found in the United States. But there are limitations.
For one thing, lending criteria are extremely rigid, much more so than in the U.S. For another, Danish borrowers must come up with far larger down payments. In the United States, borrowers who make a 20% down payment tend to get the best terms available. But in Denmark, to achieve an 80% loan-to-value ratio, borrowers must take out a variable-rate second mortgage to cover the difference.
Danish mortgages are also “portable,” meaning that when owners sell their homes, they can carry their mortgages over to the new house.
Let’s hope that Danish mortgages aren’t brokered by dirty “rotten” scoundrels.
Countries covered in the article include the aforementioned Denmark, Great Britain, Italy, Japan, Germany, and our neighbor’s to the north, Canada. The general consensus among these countries is to require substantial down payments.
This is not news, it’s spam!
Google has a feature called alerts that filters news stories from across the web and sends them directly to your email account. I’ve used this feature in the past to access stories related to mortgage and real estate. In the beginning it was cool getting news links sent to me on a regular basis. However, I began noticing a trend; the alerts were including press releases more frequently.
A press release can or cannot be news. When the Dallas Cowboys recently announced that Bill Parcells was retiring, the press release could be considered newsworthy. It’s newsworthy because there aren’t too may coaches employed by the Dallas Cowboys named Bill Parcells. When a real estate company announces that they launched a website that streamlines the home buying or home selling process, the press release is not considered newsworthy. Why? There are a multitude of real estate websites launched every month that have tried to streamlined the home buying or home selling process. This is not news, it’s spam! Mortgage companies are just as guilty. When I see a “Prequalification”, “1% Loan”, or “Lowest Rates” press release, I know it’s spam.
Unless your a Pacific Islander, most people just don’t like spam. Sure you can wrap it rice and seaweed and call it musubi but it’s still spam. I hope Sergei and Larry are paying attention and improve alerts to ensure they don’t include spam that are camouflaged as press releases.
Top Five Fridays – Sports teams and players
Here are my top five sports teams, for those of you that know me, these are no-brainers:
- New York Jets: As a kid growing up in the greater NYC area, there were two teams televised, the Giants or the Jets. I was a Mets fan in the 80’s and since the Jets played at Shea Stadium I grew up a Jets fan. The years since Joe Willie’s guarantee have not been kind to the Jets but you won’t find a more devoted fan base in the entire sports world. Favorite Jets player: Vinny Testaverde.
- New York Mets: My older brother was a Yankees fan so I automatically gravitated to the “younger brother” team, the New York Mets. Favorite Mets player: Mookie Wilson (honorable mention goes to Bill Buckner)
- New York Knicks: The Knicks were given a gift when they were awarded the 1st Round Pick in 1985 and chose Georgetown center Patrick Ewing. During the Ewing era, the Knicks were good but Michael Jordan always stood in their way of a championship. Ever since Patrick was traded, I just haven’t had a connection to this team. Favorite Knicks player: Patrick Ewing
- Denver Nuggets: I grew up watching the Knicks till I came to Denver to visit in 1994. I caught a Nuggets game and was enamored by the young team. The 1994 team went on to pull off one of the greatest upsets of all time when they beat the #1 seed Seattle Supersonics coached by current Nuggets coach George Karl. I’ve been a fan ever since. Favorite Nuggets player: Carmelo Anthony.
- New York Giants: While I grew up a Jets fan, I was also a Giants fan for one reason, they were coached by the king of sarcasm, Bill Parcells. Favorite Giants player: Lawrence Taylor.
100% Financing
Recently a visitor used google to find my site:
what credit score can i get 100% finanacing on a home
The quick answer to this visitor’s question is 620 provided you have an established credit history, a mortgage history or verification of rent and 12 months of canceled checks.
FAQ: How do I save on closing costs?
Q: How do I save on closing costs?
A: To save on closing costs, you need either strong negotiating skills or a lot of time on your hands to shop.
Strong negotiating skills: When dealing with a lender one on one, you need to realize that everything is negotiable. It’s a matter of who’s going to pay what. If you don’t want to pay for an appraisal, a credit report, a processing fee, etc. you can let the lender pay for them but you may get a higher rate. Some lenders pay for your appraisal especially if you’re a referral or a repeat customer. Some lenders charge an application fee on their good faith estimates only to waive it at closing. Have your lender explain each fee. If they have trouble explaining a fee or if they say “don’t worry about this fee” or you should choose another lender.
Lot of time on your hands to shop: Have lenders compete for your business. However, when lenders compete you have to remember that not every lender plays by the rules. One lender may give you the deal of a lifetime just to get your business and surprise you with a higher rate or costs at closing. Make sure you shop on the same day as well since rates change daily and make sure you only compare the lender portion of the good faith estimates (section 800) since some lenders may not include title and government fees.
The real answer is caveat emptor.
It pays to be cheap
I just finished reading an article called How Cheapest Family in America Saves Cash. It’s about a family that lives cheaply. They’re so cheap, the father considers himself the Cheap Economizing Officer of the family. The article goes on to say they basically plan their expenses and execute their plan.
Living cheaply doesn’t mean that you’re poor. It means that you know what you’re spending your money on and you don’t make hasty decisions. Warren Buffet may be bullish on Wall Street but he’s notoriously cheap. Just ask the heirs to his massive fortune.
I often think of people I’ve worked with in the past who’ve whined about how their bills piled up and they just can’t seem to get ahead. Economic pundits call it “living paycheck to paycheck” or “keeping up with the Jones” and it affects the affluent as well as the poor. Sometime I just wish people were cheap.
I’ve seen people own timeshares mainly because they believe they deserved yearly vacations. At a mere cost of $300 a month. I guess during the aggressive timeshare pitch they never thought that $300 per month would greatly impact their daily life. After viewing a timeshare program in Hawaii I can honestly say that they’ve got to be the dumbest investments ever! The sales pitch was to “preserve my family’s vacation dollar” or something to that affect. If I really wanted to preserve my family’s vacation dollar, I’d skip hotels and strictly use vacation rentals by owner. The rates are competitive and I can get a condo instead of a hotel that way I wouldn’t have to eat out all the time.
I’ve also seen people drive really nice cars. Does driving an Audi or a Lexus really define who you are as a person? Probably not. A car is a depreciating asset. It does nothing for your net worth. Over time it gets old and you’ll be wanting a new car because it’s the toxic ethylbenzene (the new car smell) that got you hooked in the first place. If you’re going to buy a new car, do your homework. Not every car has good resale value and you’ve got to really consider why a Ford dealership is unloading their Ford Escapes at a fraction of the cost when Honda dealers rarely budge on their Accords.
I’ve seen people with credit cards up the wazoo. I’ve heard every story as to why people have a lot of credit cards and they just don’t fly. One or two is more that enough. I’ve always viewed credit cards as a loan from guys with names like Vinny and Vito, if I can’t pay it off in 30 days, it aint worth the beating I’m going to get. (If your name is Vinny or Vito, Come stai paesano!)
Don’t even get me started on the homes people buy. During the last few years the American dream of buying a house with a white picket fence turned out to be a nightmare.
In conclusion, there’s a certain comfort in living below your means and while being cheap is not sexy, it’s not stressful either.
Links: Ben Stein gets real
Here are some interesting real estate articles around the web:
- Ben Stein discusses his view on real estate investment properties. I know Ben Stein is a pretty smart dude but when I see him I keep thinking of his classic line “Bueller?” from the movie Ferris Bueller’s Day Off.
- The Denver Post discusses the disparity between the real estate markets east of the Front Range (weak) and west of the Front Range (strong).
- If you bridge the Highland neighborhood to Denver, they will come.
- He’s back! Denver Nugget Carmelo Anthony took a sabbatical from basketball for punching another player. Technically it’s called a suspension. Let’s hope he took some anger management classes.
- Only 10? I expected more than 10 mortgage brokers to be denied registration under the Mortgage Brokers Registration Act.
- This weekend Denver was hammered with more snow. Stop complaining and go ski, snowboard, snow blade, snow shoe, cross country ski, take a sleigh ride, etc. If you hate the snow, move to Arkansas.
Top Five Fridays – Sports Movies
With the Superbowl looming, I decided to keep the sports theme going for top five fridays. Here are my top five sports movies:
Caddyshack: The quotes. The characters. The storyline. It’s a true classic! Chevy Chase and Bill Murrary are great but Rodney Dangerfield steals the movie. Recently I caught Caddyshack during the Christmas Blizzard of 2006 and I couldn’t stop laughing.
Rudy: Before he was a hobbit, Sean Astin played an obscure practice player named Dan “Rudy” Ruettiger for Notre Dame in the 70’s. When DVD’s came out, it was one of the first movies I had to have (Office Space was the other). It’s also the movie where Jon Favreau and Vince Vaughn got their start.
Remember The Titans: Football cures the racial tension. It’s a Disney movie so you knew that it was going to have a happy ending despite one of the players becoming paralyzed.
Any Given Sunday: Al Pacino and Jamie Foxx play a old school coach and an over-confident quarterback respectively. Funny how life imitates art as this story was played out recently in the NFL with Bill Parcells and Tony Romo of the Dallas Cowboys.
Happy Gilmore: Adam Sandler scores big in this golf inspired movie. To save his mother’s house, Happy Gilmore enters a golf tournament and beats the top pro, Shooter McGavin.
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